Should you avoid the retail sector?

Unfortunately, a lower Australian dollar didn't help local retailers such as Myer Holdings Ltd (ASX:MYR) and JB Hi-Fi Limited (ASX:JBH) who actually lost ground to international sellers during the period.

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The National Australia Bank Ltd.'s (ASX: NAB) latest online retail sales index has found that Australians spent a total of $16.6 billion online in the year to January, representing annual growth of 9%. That's nearly double the 4.7% growth rate recorded by traditional bricks-and-mortar retailers during the same time period.

While impressive; the growth rate is certainly slimming. In January 2011, for instance, online retail sales grew 32% year-on-year, while that number fell to 13% year-on-year growth in January last year. As it stands, online sales comprise roughly 6.9% of traditional retail spending, which totalled $241 billion in 2014, according to the Australian Bureau of Statistics.

Unfortunately, a lower Australian dollar didn't help local retailers who actually lost ground to international sellers during the period. The report showed that domestic retailers, which would include companies such as JB Hi-Fi Limited (ASX: JBH), Myer Holdings Ltd (ASX: MYR) and Harvey Norman Holdings Limited (ASX: HVN), controlled 74.8% of online sales in January, down from 76% in December.

It's been a poor day for Australia's retailers on the share market, especially thanks to the Reserve Bank's interest rate decision yesterday. Investors had been hoping for a reduction in rates to help spur consumer spending, but instead the bank kept them on hold at 2.25%. Myer and JB Hi-Fi have both fallen 1.9% and 0.5% respectively, while Dick Smith Holdings Ltd (ASX: DSH) has dropped 0.9%.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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